Goldman Sachs may be about to have a new man at the top. It may have already a new CFO, new heads of securities and a new set of executives drawn from the investment banking division (IBD). But it's still got the same old-but-new strategy of stocking up on senior talent from outside.
Since the start of August, Goldman has added 29 executive directors (EDs) and managing directors (MDs) globally according to people who've updated their profiles on LinkedIn. Eight of the new hires have been MDs.
Solomon won't officially be CEO of Goldman Sachs until Lloyd Blankfein resigns, but his stamp is firmly imprinted on the new hires. Five of the new managing director hires are in M&A, with four in New York City, including Max Ritter, the new head of Latin American M&A who joined from Morgan Stanley, David Hammond, the former global head of metals and mining M&A at Credit Suisse, Rebecca Kruger, a former MD in Citi's power business, and Steven Nielsen, the former head of industrial technology investment banking at BMO Capital Markets.
In June, Solomon said Goldman was going after 1,000 new banking clients and that the firm had hired 20 new "senior lateral" bankers in the past year to help pursue them. In this sense, the new banking MDs may be more of the same.
Also more of the same is Goldman's ongoing demand for executive directors. The firm is chasing $5bn in additional revenues by 2020 and is recruiting externally to help achieve its aim. Last September, now ex-COO Harvey Schwartz made a presentation revealing that Goldman had doubled external hiring to its fixed income division. Recruitment was ongoing in the first half of this year, with executive director and vice presidents (VP) the sweet spots.
As 2018 moves into the final straight, Goldman seems to be hiring executive directors - the notch below MD - with particular enthusiasm. As the chart below shows, the securities division remains the hiring sweet-spot, with the addition of people like Sai Dharmayogan, the former head of execution and advisory at Citi, who arrived in August - presumably to help Goldman hone its electronic trading offering.
The ongoing flurry of new hires suggests that Goldman Sachs is going to be more populous than ever during the reign of CEO D-Sol. The ball is already rolling: when the firm announced its second quarter results a few months ago, it revealed the addition of nearly 4,000 people between June 2017 and June 2018, a headcount increase of nearly 11%.
Less promisingly, the thousands of new staff have coincided with a squeeze on pay, which has generated both departures and complaints from Goldman's securities division. 2018 is a 'partner year' at Goldman Sachs, and one in which Solomon will therefore get a chance to shape the top-most rank of the firm by steering who gets promoted. The real crunch, however, could come in 2019, when Goldman promotes its next round of managing directors. Executive directors who've stayed loyal to Goldman for years will expect a promotion; so too may all the new high fliers. Last year's MD promotion round was already Goldman's largest ever as the firm tried to keep everyone happy amidst the pay squeeze. If there's going to be a clash between Goldman lifers and Goldman newbies, it will come in the second year of Solomon's reign. The ongoing policy of hiring externally could create problems for the DJ-King.
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